Appraisal Clause
Plain English
An appraisal clause is a way to settle a fight over how much a claim is worth without going to court. You and the insurer each hire an appraiser, they pick an umpire, and if the appraisers disagree, the umpire decides. It settles the dollar amount, not whether the policy covers the damage.
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On this page
Definition
An appraisal clause is a policy provision for settling disagreements about the amount of a covered loss. Each side hires an appraiser, the appraisers choose an umpire, and the umpire decides any difference. Appraisal resolves how much, not whether the policy covers the loss.
Why It Matters
Appraisal can be faster and cheaper than a lawsuit when the only disagreement is the amount, such as an estimate that's too low.
Real-World Example
Imagine a homeowner's roofer says the repair costs $18,000 and the adjuster says $12,000. The homeowner invokes appraisal. Each side's appraiser estimates the loss; they disagree, and the umpire sets it at $15,500. The insurer pays that, less the deductible.
Common Misconceptions
- Using appraisal to argue about whether the policy covers a loss.
- Assuming appraisal is free; each side usually pays its own appraiser.
Key Takeaways
- Texas Department of Insurance: "You and the insurance company each hire an appraiser. The two appraisers then choose a third appraiser as an umpire."
- "The umpire's decision is binding on both you and the insurance company," per TDI.
- Appraisal settles the amount of loss, not coverage.
- Check your policy for the appraisal process and deadlines.
Frequently Asked Questions
Who pays for appraisal?
Usually each side pays its own appraiser and they share the umpire's cost.
What's it commonly confused with?
Mediation, which is a negotiation without a binding decision.
Related Terms
Related Coverages
- Homeowners Insurance
Related Scenarios
Explore the rest of the Claims category.
Browse Claims terms →Sources
The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- Home insurance guideTexas Department of Insurance
Educational information, not advice: This page is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers.